Shareswatch Australia

In the 1960’s the Japanese rightwing had a problem. The leftwing was arguing strongly that Japan’s postwar economy badly needed access to the markets and raw materials of China, North Korea and the Soviet Union if it was to survive (in prewar years it had depended heavily on China and the Korean peninsula for both).

It is time once again to put my ramblings, rants and ruminations for the previous 12 months under the spotlight. Did I correctly spot any stock market or economic trends or should I be standing in the corner with the dunce cap on for most of 2010?

Well 2009 is almost over and although stock market investors did it tough in the first quarter, overall the ASX All Ordinaries and S&P/ASX 200 posted healthy gains of around 30%. This means stocks & shares were in fact a good place to have your money over the last 12 months.

The Australian stock market has finally rallied back up to where I believed the bear market bottom was last year but although this is a positive sign, the Australian economy faces a number of challenges in the years ahead and these might well make it difficult for the market to surge ahead in 2010 and beyond.

Recently you have probably noticed that gold prices are getting plenty of media coverage and we are often hearing predictions that gold will hit $2000 USD an ounce in the not too distant future. Sadly what is often not highlighted is that gold is rising mainly because the U.S. dollar is falling and that the demand for gold is largely being supported up by investors.

After yesterdays surge on the Australian stock market now is a good time to take in the big picture view and see what the charts may be telling us. It seems clear that the market is trending upwards but for how long will this rally last and can we learn anything from looking back at the S&P/ASX 200 over the last few years?

Recently Glenn Stevens of the Reserve Bank of Australia (RBA) appears to be taking credit for everything from the robust nature of the Australian economy to the mining boom. What he seems to have forgotten or is not willing to admit, is that the RBA has made a number of  forecasts over the last couple of years that have been very wrong and probably raised interest rates too high in 2008.

Recessions are not only bad for an economy but they are also appear to create an environment where some of the worst financial reporting and commentary thrives. Suddenly journalists actually start to believe they know how the recession will unfold and many self titled market experts toss up the most bizarre predictions that cover everything from the end of the global financial system, to cunning plans being secretly developed by bankers to control the world.

Technological advancements and the fortunes of mankind have been intertwined since our distant ancestors worked out how to harness the power of fire or use a sharpened stick to hunt for food. The future will be no different so it makes sense as investors to try and have some understanding of how some technologies may develop over the next decade or so.

Without a doubt there are a lot of scary economic numbers out there and as far as the Australian economy goes, things seem to be heading downhill fast. But as strange as it seems, the bad news recently has not been all that bad and actually there has even been some good news. So is it possible that at long last that the bear is back in its cage?

Often economists, journalists and politicians use so much jargon when talking about the current economic situation that is is hard to follow what they are actually trying to say. Economists for example cannot seem to agree on anything except that they are legends in their own minds, journalists try and fumble through economic discussions and politicians simply try and convince us they know what they are talking about. The simple fact is much of the time all three groups talk utter rubbish.

Like most stock market investors I will end the year well and truly bruised.  Although I wrote earlier in the year that 2008 would not be a good for Australian shares, I have to admit I did not think it was going to be this bad. Therefore I am hesitant to make any comments regarding the Australian stock market in 2009 as I am sure to find little turns out as I expect.  However just as Nigel Tufnel was able to rise above substandard catering on the Spinal Tap Tour, I am going to rise above the current carnage and outline what I think will happen as next year unfolds.

Let me first start by saying I think any predictions about the future are best described as forward looking guesstimates. So before reading on, please remember this is just my view and I am not aware of any ability I have to see clearly into the future.